Finally, it’s Brexit week. Britain will vote on the referendum this Thursday and either result will significantly affect the EURUSD pair. For this reason, traders need to be cautious on how they approach the market during this whole week.
The market will probably stay in a tight range until Thursday – Friday after which EURUSD will choose a direction when the vote result is released.
With that in mind, the pair is still inside of the large upward channel and looking from the weekly timeframe the picture is still bullish. The pair met resistance from the previous high close to the 1.14 handle and now declined from there. Lower the, together with the support trendline of the channel the 200 – day moving average provided strong support for the pair in the 1.11 – 1.12 area.
We can better see how the market fell from the 1.14 resistance on this chart. The very near-term picture is bearish suggesting some further decline with the first support coming at 1.1230. The second is the support line of the large channel.
Also, an ascending triangle could be forming on the 4h timeframe. In most cases, ascending triangles break to the upside, as the ever increasing buying pressure finally breaks through the horizontal resistance line.
This supports the overall bullish bias for the pair on the larger time frames, like the weekly and daily charts.
On the hourly chart, we take note of this bullish trendline that held the uptrend well for the past two trading days. Now, after the market declined from the 1.14 level the price is headed towards this support trendline.
If it holds, then there will be an increased probability of the ascending channel on the 4h timeframe to be broken to the upside.
If it fails to hold and price instead breaks it to the downside, then it’s likely that the 1.1230 support level from the 4h chart will be reached.
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I've been a professional trader for over 5 years.
Currently I work as forex analyst for different investment companies.
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